Wells Fargo: Fed won't cut interest rates anytime soon, dollar will strengthen further

In the absence of a catalyst to trigger a reversal, the current theme of dollar strength and arbitrage operations is likely to continue further, Wells Fargo said. "Widening spreads are likely to further support the dollar as other G10 central banks cut rates ahead of the Fed's likely move in September," said Chidu Narayanan, chief Asia-Pacific strategist at the bank in Singapore. Narayanan added that next week's CPI inflation data will be key, and given that there is no overall risk of a recession, the short-term arbitrage outlook remains optimistic, and further upside for the dollar/yen is expected.